The best sign of economic recovery

Experts will continue to go back and forth about the length of the downturn, whether we've hit bottom yet and how long it will take to return to pre-crash property values. The answers the experts return are bound to be fairly well distributed up and down the spectrum of possibility. I'll probably side with those who use prediction methodologies that I find useful.
Having spent a fair amount of time at engineering school, I learned that the methodology employed can be almost as important as the results returned in a study. In every case, they add weight to the findings, though in most cases this is a subjective measure. Knowing what methods were used to come up with answers often tell us how much faith we can place — or in engineering parlance — how much precision there is in the results.
For instance, whenever I hear an economist put the current economic environment in terms of a theory that was used by advisors to a president who served in the last century, I tend to discount the findings. I'm not suggesting that I fully understand the math underlying the models that sprang from these theories. I'm just saying that I've been living in the aftermath of their use for the last three or four years and have lost faith in them.
No, if I'm going to buy into a forecast on the end of the downturn, I'm going to base it on something a bit more...human. When I see an industry's top players shifting position, it tells me something about the state of the industry and its most likely future states.
When an industry is overwhelmed by fear, uncertainty and doubt, as ours is whenever we experience a downturn, its players will either exit the business or hunker down to weather the storm. The decision to stay or go most often depends on the likelihood of continued employment at the current position, as well as the likelihood of advancement as the company exits the downturn. In any event, those that choose to stay in an industry are likely to be the most professional, the best trained, and the most successful, i.e. those that have invested the most in being successful here. Some successful players always leave as they have reason to believe they'll succeed elsewhere, but those who have achieved only moderate success are much more likely to exit the industry during a downturn. At least that's the way it always seems to work here.
During this most recent downturn, thousands of mortgage brokers, bankers, title and settlement agents, and residential appraisers left the business. Those that stayed hunkered down and either cut costs or engaged in innovation in anticipation of the recovery. Lately, I've seen a bit more movement among industry players I consider leaders. It's a little early in the game to take out my forecasting hat, but I'm watching carefully to see who is coming out of hibernation to pursue new opportunities.
If you're looking for a good indicator of the end of the downturn, start paying attention to who is moving into new positions of leadership. When that starts to happen, things are about to get lively again. I'm beginning to believe that this might be coming sooner rather than later.
Rick Grant is veteran journalist covering mortgage technology and the financial industry.
Follow him on Twitter: @NYRickGrant

Rick Grant is a principal of Jim Thorpe, Pa.-based RGA Public Relations (RGA), a company he founded in early 2007 to provide businesses with customized strategic communications solutions. The firm currently serves some of the most successful firms in the US mortgage lending industry.

Prior to launching RGA, Grant founded Texell Interactive Media, a production company delivering electronic audio and video content for Web-based marketing. The company won an award for business podcasting in 2006 and was sold to a prominent public relations firm.

This month inHousingWire magazine

The appraisal industry is in the midst of huge disruption as automated valuation models and hybrid appraisal products gain favor with regulators and investors. What does the future hold for appraisers and appraisal companies as they adjust to the new realities of automation?

Feature

[Free HousingWire Magazine read] As Millennials grapple with paying off student loans, their opportunity to buy a home gets pushed further and further into the future. That delay has consequences far beyond individual students — the growing student debt crisis impacts every part of the economy.

Commentary

There has been a conscious and rapid shift to broaden the use of alternative valuation products for origination. Not every decision needs a $500, full-blown 1004 interior appraisal. And in some markets where appraisers are short in number, the turn times can stretch from days to weeks. What these new alternative — some would say disruptive — valuation products do is enable lenders and servicers to better match the product to the risk by harnessing big data and technology.